Economy Sluggish in January 2014, Uncertain Expectations for Growth in April 2014

CEIC Russia Data Talk - April 9, 2014 - Business surveys provided by the Russian Economic Barometer, an independent provider covering 500 industrial, 300 agricultural and 100 financial enterprises (banks) spanning most of the regions of the Russian economy provide an important economic assessment from the perspective of Russian enterprises, most of which are medium-sized from 150 to 2,000 employees and include various types of ownership structure. The data provide information regarding current sentiments and expectations. The capacity utilisation rate amounted to 76% during January 2014, which compares to 74% during December 2013 and 79% in January 2013. This is lower than the 77.6% monthly average observed during 2013, and it declined for a second consecutive month. Despite the decline, capacity utilization did not experience significant fluctuations and remained relatively constant throughout 2013. In spite of the decline in January 2014, the overall level of industrial capacity utilization is expected to be supported. The diffusion index on enterprises' production 3-month future expectations rebounded to 56% in April 2014 from 29% in January 2014, reflecting positive expectations, mainly attributable to seasonality. The labour utilisation rate jumped to 89% in January 2014 from 84% in December 2013 and 87% in January 2013. The expectation diffusion index of employment for enterprises with improved outlook for the next three months exhibits further positive expectations with 45% for April 2014 and grew for the second month from 39% in February 2014, mostly attributed to seasonal influence. Yet the growth is slower than in the previous year (51% for April 2013). New orders rose from 80% in December 2013 to 84% in January 2014, which is close to the average for 2013. The diffusion index of new orders for enterprises with rising indicator for the next three months exhibits consecutive growth in expectations from 42% in December 2013 to 65% in April 2014, reflecting the recovery from the seasonal slump and positive sentiments. The indicator measuring enterprises in a good or normal financial situation declined in January 2014 for the third consecutive month from 80% in October 2013 to 63% in January 2014. However, this is consistent with seasonal declines observed during 2012 and 2013 and is far removed from the trough of 2009. The diffusion index of the financial situation for enterprises with an improving situation for the next three months exhibits expectations of recovery for April 2014 (53%) from the dip in February 2014 (42%). All indicators showed mixed trends in January 2014 with seasonality having a significant influence on the final results. The Russian economy has yet to find drivers of growth during the post-crisis recovery period following its stagnation. However, the expectation diffusion index for various indicators reveals positive momentum towards April 2014, which might be indicative of future growth. The indicators are little influenced by the political crisis with neighbouring Ukraine due to the timing of current events; the current survey was published as the crisis in Ukraine occurred. There might be a potential shift towards negative expectations down the road depending on any deterioration of the situation and a possible tightening of sanctions on Russia. By Alexander Dembitski - CEIC Analyst Discuss this post and many other topics in our LinkedIn Group (you must be a LinkedIn member to participate). Request a Free Trial Subscription. Back to Blog
9th April 2014 Economy Sluggish in January 2014, Uncertain Expectations for Growth in April 2014

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